erp systems and change management october 27, 2014
TRANSCRIPT
ERP Systems and Change Management
October 27, 2014
Objectives and Welcome
2
What’s In It For You (WIIFM)?
• Recognize characteristics of ERP systems and why organizations want them
• Understand project failure rate and success factors
• Distinguish between ERP stakeholder groups
• Describe Human Resource challenges associated with ERPs
• Realize what technical system implementations will look like in the next five years
Putting It All Together
3
Planned vs.Unplanned Change
Organizational Strategy and
Alignment
Champions, ChangeAgents and
Stakeholders
CM TalentManagement
ProjectManagement
HR and Organization Performance
Metrics
Think about everything you’ve learned so far … and apply it!
ERP Primer
4
nterprise
E esource
Rlanning P
• Why organizations want them• Why organizations hate them
Discussion
5
Why do you think the ERPs
in your readings for today
REALLY failed?
Project Failure Rate
6
40% of projects meet budget, schedule and quality goals
IBM
70% of change initiatives fail
John Kotter
50% of IT projects with budgets of > $15M run
45% over budget7% behind schedule, and deliver
56% less functionality than predicted
At least 50% of the time you have to spend $59M to get $15M in
benefits
McKinsey
So, how common is failure … really?!
What Constitutes A Failure?
7
ERP implementations that were labeled a failure may have …
• Not realized the promised ROI
• Significantly extended the implementation schedule
• Run significantly over budget
• Slowed productivity to a crawl pace
• Stopped production
• Made it impossible to deliver orders to customers
Reasons for ERP Failures
8
Twelve major reasons why ERPs fail* …
1. Lack of Top Management Commitment
2. Inadequate Requirements Definition
3. Poor ERP Package Selection
4. Inadequate Resources
5. Resistance to Change/ Lack of Buy-In
6. Miscalculation of Time and Effort
*According to Softpanorama
7. Misfit of Application Software with Business Processes
8. Unrealistic Expectation of Benefits and ROI
9. Inadequate Training and Education
10. Poor Project Design and Management
11. Poor Communications
12. Ill-Advised Cost Cutting
Success Factors
9
Successful ChangeKotter
Prosci
ConnerHeath and
Heath
Larkin and
Larkin
What are the critical success factors for implementing change?
Success Factors
10
Successful Change
Prosci
Top seven contributors to a successful change initiative include…
1. Active and visible executive sponsorship
2. Structured change management approach
3. Dedicated change management resources and funding
4. Frequent and open communication about the change
5. Employee engagement and participation
6. Engagement and integration with project management
7. Engagement with and support from middle management
Of projects surveyed that had an excellent Change Management Program ...
72% were on or ahead of schedule
81% were on or under budget
96% met or exceeded project goals
*Prosci® 2014 Benchmarking Report
Finance/ Procurement
InformationTechnology
HumanResources
ImpactedBusiness Units
ERP Roles
11
Many groups have an interest in an ERP implementation …
External Stakeholders
ERPProject Team
ERP Roles
12
Each group has individuals who will experience change …
Financial/Procurement
• Vendor Contract Managers
• Project Management Office (PMO)
• Accountants
• Controllers
• Budget Planners
Information Technology
• Infrastructure
• Network Managers
• Database Managers
• Run Team
Human Resources
• Succession Planners
• Classification Analysts
• Compensation Analysts
• Talent Managers
• Organizational Design Experts
• Labor Relations Managers
Impacted Business Units
• Executives
• Managers
• Employees
• Decision Makers
• Change Advocates
• User Acceptance Testers
• Trainers
• Super Users
ERPProject Team
• Governance Team• Sponsors• Project Manages• Org Change Managers• Communications Specialists• External Vendors• Requirements Analysts (RAs)• Business Analysts (BAs)• Subject Matter Experts (SMEs)• Developers• System Testers• Trainers
External Stakeholders
• Customers
• Suppliers
• General Public
• Media
HR and ERP - Parallel Universes
13
ERPs benefit from having a partner relationship with HR …
ERP Project Start
• Recruit talent
• Negotiate hiring agreements
• Assist with org chart design
• Support matrixed team
During ERPProject
• Design and implement rewards and incentives
• Manage relationship between ERP Project and collective bargaining unit(s)
• Support job description and classification changes
• Assist with LMS integration
Post ERPProject
• Manage/ support ongoing ERP training
• Collaborate with business units for repatriation of project resources
Discussion
14
What do you think is the biggest challenge HR faces during an
ERP implementation?
Technology Trends
15
”… is it practical to get to a single instance across all functions of a very large, global enterprise? No. That's not a realistic goal any more.
We're living in a world where multiple systems have to be networked together, have to communicate openly with each other and need to have sophisticated enough infrastructures on top so that the business can manage it."
The "more evolved" thinking … Companies can achieve consistencies and efficiencies in their business processes without having to use one singular system that manages the entire landscape.”
Five years from now … An ERP for every company?
Philip Say, Vice President for SAP Business Suite
What else to you want to know?
Discussion
16
For Further Exploration
17
Prosci® - http://www.prosci.com/
Kotter’s Eight Step Process for Leading Change http://www.kotterinternational.com/the-8-step-process-for-leading-change/
Conner Partners - http://www.connerpartners.com/thought-leadership/white-papers
Additional ERP Disasters Information -• http://news.cnet.com/i2-Nike-fallout-a-cautionary-tale/2100-1017_3-253829.html • http://www.zdnet.com/blog/btl/promises-promises-a-look-at-waste-managements-case-against-sap/8
338
• http://www.cio.com/article/2440386/supply-chain-management/supply-chain---hershey-s-bittersweet-lesson.html
Project Failure Statistics and Causes -• http://www.softpanorama.org/Skeptics/IT_skeptic/erp_skeptic.shtml• http://faethcoaching.com/it-project-failure-rates-facts-and-reasons/• http://blogs.gartner.com/mark_mcdonald/2012/10/29/mckinsey-report-highlights-failure-of-large-pro
jects-why-it-is-better-to-be-small-particularly-in-it/
• http://www.enclaria.com/2014/06/03/its-time-to-abolish-the-70-change-failure-rate-statistic/
Future of ERPs - • http
://www.forbes.com/sites/louiscolumbus/2014/05/12/gartners-erp-market-share-update-shows-the-future-of-cloud-erp-is-now/
• http://www.infoworld.com/article/2628850/erp/the-future-of-erp--why-the--big-erp--approach-is-dead.html